Rishi Sunak’s “mini budget” gave some urgently needed help to people struggling with rising energy bills, but included no support for the thousands of UK small businesses desperately trying to survive. Here, we share some of their reactions.
We previously covered what small business owners want from an emergency budget, with a reversal or delay of the National Insurance increase, reductions to gas and energy bills, and further increase to the employment allowance topping the list.
What was actually announced was a complex windfall tax on energy firms, that will help to pay for a range of payments to help people cope with surging energy bills.
Some of the most vulnerable households might get £1,500 over the course of the year. But, for most consumers, the support is at best a sticking plaster on a gaping wound. The vast majority of the UK population will get a £400 grant this autumn, a token gesture when the average energy bill is expected to increase by £800 in October.
There was nothing targeted at small businesses – no changes to National Insurance, no increase in the employment allowance, and no other proposed measures like bringing back free COVID-19 tests or grants to encourage investment.
And, with rocketing supply costs, hiring difficulties and a faltering economic recovery to contend with, small businesses are hugely concerned about the future.
In fact, a recent survey from the Parliament Street think tank found that almost three quarters of UK small business owners have used personal savings to stop their business from going under in the past month.
Here’s a snapshot of small business reactions to the cost of living package:
“SMEs are being left behind” – Rick Smith, Forbes Burton
As the managing director of insolvency specialist and business consultants Forbes Burton, Rick Smith knows first-hand how small businesses are struggling to survive across the country:
“Small businesses are also feeling the effects of rising prices, just in different ways. Ultimately, prices will be passed onto consumers. Business confidence is dropping hugely thanks to inflation according to the ICAEW, and price increases of 2.3% are the highest since the organisation started surveys.
“In total, SMEs contribute more than £2.3 trillion to the economy in general and despite this are being truly left behind.
“After support has dried up, many businesses are still feeling the impact of covid and Brexit, and this could be another nail in the coffin. More needs to be done to meet the chasm that has widened over the past two years.”
To cope, Smith advises businesses to examine their cash flow, consolidate debt and ideally have some liquidity. Make sure you also review your business plan, you might need to change course to get through these difficult times.
This is not however the time to cut down on marketing spend, as “reducing brand awareness when you need customers can kill companies”. A strong brand identity can also help you keep employees and attract new ones, something that’s more important than ever.
If you are able to invest in marketing, then it’s crucial you do it in the right way – our marketing section is full of top tips and expert advice.
“Support doesn’t come close” – Neil Sheth, Writefully
Neil Sheth is the founder of the on-demand copywriting service Writefully and argued for investment grants in our wishlist article.
Sheth is sorely disappointed by the support announced:
“As a small business owner, the £400 discount helps somewhat but doesn’t really come close to the increases I’m seeing across my mortgage, living and energy.
“With petrol prices climbing aggressively, even travelling to a staycation is becoming a budget consideration.
“What I’m looking for from this government is direct support and an overall attitude towards propping businesses up.”
“Businesses need help now” – Richard Osborne, UK Business Forums
The founder and CEO of small business community UK Business Forums, Richard Osborne knows more than most about what the UK’s SMEs are going through.
He’s deeply worried about the lack of government help:
“The cost of living crisis is a desperate situation for both businesses and huge swathes of our society, yet the government announcement seemed to ignore the reality and severity of what thousands of small business owners are going through every single day.
“Getting rid of the NI increase is one move the Government should make, but it isn’t going to make a huge dent. The increased costs in supply chains, especially around international trade, need to be addressed. The cost per container to import has skyrocketed, and this is in addition to eye-watering fuel and energy prices.
“Tax in the UK is at the highest it has been for some 70 years. The two pence drop in the basic rate of income tax will provide some help, but that’s not for another two years!
“Businesses need help now and, without it, there’s no question that thousands will fold long before this comes into force.”
Final thoughts
The common consensus among small businesses is that the government lacks the political courage to properly combat the cocktail of rampant inflation, increasing supply chain costs, and low consumer confidence.
A £15bn support package may sound impressive on paper but, when it amounts to £400 per household, it won’t make much overall difference for most people.
Of course, the energy bills payment may boost consumer wallets, encourage spending and bring indirect benefits for those SMEs that have seen a slowdown in trading since the cost of living crisis began.
However, yesterday’s budget has essentially ignored small businesses and the announced discount will not be distributed until October. Small business owners urgently need immediate aid and significant measures to help with bills that are becoming increasingly unaffordable and an extremely difficult trading environment.
What do you think about the government’s latest support announcement? Send us your thoughts at hello@startups.co.uk.
